It looks as though Christmas came early for many Amgen (NASDAQ:AMGN) shareholders last Thursday when oft-maligned CEO Kevin Sharer announced he will step down from that role in May 2012. Sharer will remain as chairman of the world’s largest biotechnology company until the end of 2012, when he will retire.
Sharer’s departure apparently warmed the hearts of investors. They bid the company’s shares up more than 4% from the close Wednesday to the final bell on Friday afternoon. But even at its current price of $60.05, AMGN is 5% lower than it was a decade earlier when Sharer took over as CEO.
Amgen’s tepid performance during the past 10 years has often been laid at Sharer’s doorstep. He has been blamed for safety issues with the company’s anemia drugs, layoffs and a lack of R&D productivity. Others thought he made too much money.
Another victim of the company’s disappointing pipeline appears to be Roger Perlmutter, who will step down as executive VP for R&D in February. Sean Harper, the company’s chief medical officer will take his spot.
Did Sharer’s retirement come sooner than expected? Geoffrey Porges, a biotechnology analyst at Sanford C. Bernstein, told The New York Times that he thinks it did. “You have a high level of investor dissatisfaction,” he said. “You can clearly see the hand of the investors and the market in these transitions.”
Based on comments on the website CafePharma, Amgen employees were not enthralled by Sharer’s leadership either. While we can’t vouch for the veracity of the comments because they’re posted anonymously, few were kind to the outgoing CEO:
- “10 years lost, 10 years too late!”
- “The only report card that matters is what he did for shareholders. He gets an F. In terms of lining his own pocket — the only thing he cares about, he gets an A.”
- “A national holiday should be proclaimed, the day he departs, permanently.”
One poster cautioned that there’s no guarantee that things will get better with Sharer’s successor, Robert Bradway, the company’s president and chief operating officer.
Michael Yee, a San Francisco-based analyst with RBC Capital Markets offered some suggestions to the incoming CEO. “What I think Bob Bradway needs to do is shake up the culture at Amgen, to reinvigorate a focus of innovation for new products and a focus on cutting expenses,” he said in an interview with Bloomberg. “This company has not had a successful history of business development.”
Bradway came to Amgen five years ago as vice president of operations. He was made chief financial officer in 2007 and president last year.
Chris Raymond of Robert W. Baird & Co. agreed that a shakeup at Amgen is needed, perhaps a more drastic restructuring or a strategic move, Bloomberg reported. “Under new management, perhaps more avenues toward unlocking shareholder value can be explored.” he stated in a note to clients.
To Sharer’s credit, under his watch Amgen has taken several steps to help boost the company’s investor appeal, including cutting costs, accelerating Amgen’s share buyback program and starting to pay dividends.
Evidently, it just wasn’t enough.